PeopleNationality: Noun--Macanese (sing. and pl.). Population (end-2000): 437,903. Population growth rate (2001): 1.79%. Ethnic groups: Chinese 95%, Portuguese 3%. Religions: Buddhist 45%, Roman Catholic 9%. Languages: In 1992, the government gave the Chinese (Cantonese) language official status and the same legal force as Portuguese, the official language. Education: Literacy--90%. Work force: Industry and commerce--68%; services--12%; agriculture and fishing--9%.

GovernmentType: Special Administrative Region (SAR) of the People's Republic of China since December 20, 1999 with its own mini-constitution (the Basic Law). Branches: Executive--President of the People's Republic of China (head of state), Chief executive (head of government), Executive Council (cabinet). Legislative--Legislative Council. Judicial--Independent judicial system with a high court (the Court of Final Appeal).

PEOPLEMacau's population is 95% Chinese, primarily Cantonese and some Hakka, both from nearby Guangdong Province. The remainder are of Portuguese or mixed Chinese-Portuguese ancestry. The official languages are Portuguese and Chinese (Cantonese). English is spoken in tourist areas. Macau has only one university (University of Macau); most of its 7,700 students are from Hong Kong.

HISTORY Chinese records of Macau date back to the establishment in 1152 of Xiangshan County under which Macau was administered, though it remained unpopulated through most of the next century. Members of the South Sung (Song) Dynasty and some 50,000 followers were the first recorded inhabitants of the area, seeking refuge in Macau from invading Mongols in 1277. They were able to defend their settlements and establish themselves there.

The Hoklo Boat people were the first to show commercial interest in Macau as a trading center for the southern provinces. Macau did not develop as a major settlement until the Portuguese arrived in the 16th century. Portuguese traders used Macau as a staging port as early as 1516, making it the oldest European settlement in the Far East. In 1557, the Chinese agreed to a Portuguese settlement in Macau but did not recognize Portuguese sovereignty. Although a Portuguese municipal government was established, the sovereignty question remained unresolved.

Initially, the Portuguese developed Macau's port as a trading post for China-Japan trade and as a staging port on the long voyage from Lisbon to Nagasaki. When Chinese officials banned direct trade with Japan in 1547, Macau's Portuguese traders carried goods between the two countries. The first Portuguese governor was appointed to Macau in 1680, but the Chinese continued to assert their authority, collecting land and customs taxes. Portugal continued to pay rent to China until 1849, when the Portuguese abolished the Chinese customs house and declared Macau's "independence," a year which also saw Chinese retaliation and finally the assassination of Gov. Ferreira do Amaral.

On March 26, 1887, the Manchu government acknowledged the Portuguese right of "perpetual occupation." The Manchu-Portuguese agreement, known as the Protocol of Lisbon, was signed with the condition that Portugal would never surrender Macau to a third party without China's permission.

Macau enjoyed a brief period of economic prosperity during World War II as the only neutral port in South China, after the Japanese occupied Guangzhou (Canton) and Hong Kong. In 1943, Japan created a virtual protectorate over Macau. Japanese domination ended in August 1945.

When the Chinese communists came to power in 1949, they declared the Protocol of Lisbon to be invalid as an "unequal treaty" imposed by foreigners on China. However, Beijing was not ready to settle the treaty question, requesting a maintenance of "the status quo" until a more appropriate time. Beijing took a similar position on treaties relating to the Hong Kong territories.

Riots broke out in 1966 when the procommunist Chinese elements and the Macau police clashed. The Portuguese Government reached an agreement with China to end the flow of refugees from China and to prohibit all communist demonstrations. This move ended the conflict, and relations between the government and the leftist organizations have remained peaceful.

The Portuguese tried once in 1966 after the riots in Macau, and again in 1974, the year of a military revolution in Portugal, to return Macau to Chinese sovereignty. China refused to reclaim Macau however, hoping to settle the question of Hong Kong first.

Portugal and China established diplomatic relations in 1979. A year later, Gen. Melo Egidio became the first Governor of Macau to visit China. The visit underscored both parties' interest in finding a mutually agreeable solution to Macau's status; negotiations began in 1985, a year after the signing of the Sino-U.K. agreement returning Hong Kong to China in 1997. The result was a 1987 agreement returning Macau to Chinese sovereignty as a Special Administrative Region (SAR) of China on December 20, 1999.

GOVERNMENTThe chief executive is appointed by China's central government after selection by an election committee, whose members are nominated by corporate bodies. The chief executive appears before a cabinet, the Executive Council, of between 7 and 11 members. The term of office of the chief executive is 5 years, and no individual may serve for more than two consecutive terms. The governor has strong policymaking and executive powers similar to those of a president. These powers are, however, limited from above by the central government in Beijing, to whom the governor reports directly, and from below (to a more limited extent) by the legislature. Edmund Ho, a community leader and banker, is the first China-appointed chief executive of the Macau SAR, having replaced General de Rocha Viera on December 20th 1999.

The legislative organ of the territory is the legislative Assembly, a 23-member body comprising eight directly elected members, eight appointed members representing functional constituencies and seven members appointed by the chief executive. The Legislative Assembly is responsible for general lawmaking, including taxation, the passing of the budget and socioeconomic legislation. In the last election, held in September 1996, pro-business groups won four of the eight directly elected seats, while pro-China parties dropped from four seats to three and the number of pro-democracy representatives fell from two seats to one. Unlike in Hong Kong, the legislature's term straddled the handover of sovereignty to China, and has even been extended from its normal 4-year term until October 2001. The city of Macau and the islands of Taipa and Coloane each have a municipal council.

The legal system is based largely on Portuguese law. The territory has its own independent judicial system, with a high court. Judges are selected by a committee and appointed by the chief executive. Foreign judges may serve on the courts. In July 1999 the chief executive appointed a seven-person committee to select judges for the SAR. Twenty-four judges were recommended by the committee and were then appointed by Mr. Ho. Included are three judges who serve on the Macau SAR's highest court, the Court of Final Appeal (CFA): 39-year-old Sam Hou Fai (who will be chief justice), 32-year-old Chu Kin, and the 46-year-old Viriato Manuel Pinhiero de Lima.

Principal Government Officials Chief Executive--Edmund Ho Hau Wah Secretary of Administration and Justice--Florinda da Rosa Silva ChanSecretary of Economy and Finance--Francis Tam Pak YuenSecretary of Security--Cheong Kuoc VaSecretary of Social Affairs and Culture--Fernando Chui Sai OnSecretary of Transport and Public Works--Ao Man Long

ECONOMYMacau's economy is based largely on tourism, including gambling, and textile and fireworks manufacturing. Efforts to diversify have spawned other small industries, such as toys, artificial flowers, and electronics. The clothing industry has provided about three-fourths of export earnings, and the gambling industry is estimated to contribute more than 40% of GDP. More than 8 million tourists visited Macau in 2000. Although the recent growth in gambling and tourism has been driven primarily by mainland Chinese, tourists from Hong Kong remain the most numerous. Recently, gang violence, a dark spot in the economy, has declined somewhat, to the benefit the tourism sector.

Macau depends on China for most of its food, fresh water, and energy imports. Japan and Hong Kong are the main suppliers of raw materials and capital goods. Output dropped 5% in 1998 and 3% in 1999, with a small 2% gain in 2000.

Over the longer term, the relocation of manufacturing operations from Macau to the neighboring Chinese province of Guangdong will extend to textiles and garment production as China's entry into the World Trade Organization (WTO) gives the mainland increased direct access to international markets. Mainland competition, along with the phasing out of Multi-Fiber Arrangement (MFA) quotas, which provide a near guarantee of export markets, over the next few years, will eventually spell the end of Macau's low-end mass production of textiles, which comprise the bulk of the SAR's merchandise export earnings. The best opportunities may lie in providing services--shipping, finance, legal--to facilitate mainland exports through Macau to the rest of the world, and conversely inflows of goods and investment to the mainland. Tourism, building on current gambling tourism, also will be an important area of potential economic growth and foreign-exchange earnings.

FOREIGN RELATIONSMacau's foreign relations and defense are the responsibility of China. China has, however, granted Macau considerable autonomy in economic and commercial relations.

U.S. REPRESENTATIONThe U.S. Government has no offices in Macau. U.S. interests are represented by the U.S. consulate general in Hong Kong.